Maximizing Return on Development to Meet Commitments

By Eduardo E. Cordeiro, EVP & CFO, Cabot Corporation

Innovation is inherently an entrepreneurial endeavor; however, it needs some structure around the process. At Cabot we have a formal stage-gate idea-to-launch system that is the industry standard for managing new product innovation excellence. Using this approach allows us to improve the quality, speed, and profitability of our new product projects while reducing the risk of failure.

"State-of-the-art business analytics information allows us to make more real-time business decisions and better understand the cost of products and their profitability"

We use this to manage the portfolio of our product and process development projects. Our process is made up of welldefined steps that help us quantify, qualify, and compare our development projects to each other on a number of dimensions. With the information we gather along the way, we make decisions to balance our resources to maximize our return on development and meet our commitments.

This process enables us to better anticipate bumps on the road, and if things are going wrong, we can quickly make course corrections. If the innovation turns out better than expected, we are ready to quickly put more resources behind it to accelerate what’s working. If it is missing milestones, we can pull the plug, which is usually a difficult decision to make.

Upgrading ERP System to Bring About Transformation

Finance transformation isn’t easy. There is no one thing that will ensure successful transformation, as it may come from leveraging new processes, technology, services or analysis. New technologies are changing operating models, and increased shareholder scrutiny and public demands for transparency are putting new pressures on finance teams.

At Cabot, we have undergone a significant investment in upgrading our enterprise resource planning (ERP) system. As a global company, operating in over 20 countries and with 80 percent of sales outside of the U.S., it was imperative for us to integrate all departments and functions across our company onto a single enterprise system. It might not seem that difficult, but running a single instance over hundreds of entities in this many countries has indeed been transformational. This single, integrated database enables our various departments to more easily share information and communicate with each other, creating efficiencies that increased performance for the company.

Recently we completed a new BI project that allows us to take a quantum leap forward in our ability to deliver high quality, relevant information throughout the organization. BI helps address many gaps and deficiencies that had inhibited our visibility by providing:

• Quality financial data that is actionable, enabling confident, informed decisions more quickly
• Best of breed tools
• Formal governance of data and reporting through a Business Process Excellence organization

This state-of-the-art business analytics information allows us to make more real-time business decisions and better understand the cost of products and their profitability. In understanding the true costs to serve our customers, we can make more informed pricing decisions to realize an appropriate return on the value that we deliver.

In recent years we have also moved toward SaaS models where we use hosted services for different functional areas, such as a new applicant tracking system for recruitment. We have also created our own proprietary manufacturing system that enables us to instantly see how each operating unit is running in any given country.